Thermal Energy Achieves Record Revenue and Improved Profitability in Second Quarter

Quarterly adjusted EBITDA more than tripled year-over-year

Ottawa, Ontario–(Newsfile Corp. – January 27, 2026) – Thermal Energy International Inc. (TSXV: TMG) (OTCQB: TMGEF) (“Thermal Energy” or the “Company”), a provider of innovative energy efficiency and carbon emission reduction solutions to major corporations around the world, today reported its financial results for the second quarter ended November 30, 2025. All figures are in Canadian dollars.

Q2 2026 Highlights:
(Compared to Q2 2025)

• Revenue increased more than 18% to a record $10.2 million
• Adjusted EBITDAⁱ increased 202% to $814 thousand
• Net income increased 2,133% to $618 thousand
• Cash position of $2.0 million and working capital of $3.4 million at quarter end
• Repaid $130 thousand on bank term loan; balance negligible as at January 26, 2026
• Order backlogⁱⁱ at quarter end increased 16% to $15.0 million
• Order backlog as at January 26, 2026, was $21.5 million

Overview

“This was an excellent quarter, marked by all-time high revenue and gross profit, as well as a threefold increase in adjusted EBITDA,” said William Crossland, Thermal Energy CEO. “The big story was the dedication and execution of our engineers, who delivered sooner than expected on some of our turnkey projects to achieve record quarterly heat recovery revenue and record quarterly revenue overall.

“Meanwhile, our order backlog is up significantly year-over-year, powered by increased demand for our proven solutions, including unprecedented HeatSponge order intake in the quarter and year-to-date. Historically, HeatSponge sales were sourced primarily from a network of independent manufacturers’ representatives, or ‘IMRs.’ What’s especially exciting is that the surge in HeatSponge orders isn’t just coming from IMRs. It’s being driven by our own sales team successfully targeting larger, more strategic opportunities. Their efforts are expanding the reach of this excellent product line and reinforcing our confidence in the long-term trajectory of the business.

“Finally, we have a strong balance sheet and are essentially free of bank debt after repaying $130 thousand on our term loan during the quarter. We are well-positioned for the remainder of the fiscal year and have lots of flexibility for executing our growth plans.”

Summary Financial Results

In thousand except % data		Three months ended Nov. 30, 2025			Three months ended Nov. 30, 2024			Six months ended Nov. 30, 2025			Six months ended Nov. 30, 2024
Revenue	$	10,188		$	8,671		$	17,038		$	17,140
Gross profit	$	4,007		$	2,873		$	7,197		$	6,398
Gross margin		39%			33%			42%			37%
Operating expenses	$	3,249		$	2,643		$	6,121		$	5,722
Net income	$	618		$	28		$	784		$	337
Adjusted EBITDAiii	$	814		$	270		$	1,165		$	822
Cash position	$	2,006		$	2,823		$	2,006		$	2,823
Working capital	$	3,440		$	3,688		$	3,440		$	3,688
Orders received	$	5,922		$	7,268		$	17,780		$	10,069
Order backlogiv as of November 30	$	14,960		$	12,940		$	14,960		$	12,940

 

Financial Review for the Second Quarter Ended November 30, 2025

Second quarter revenue grew over 17% year-over-year to a record $10.2 million. The increase was mainly due to increased revenues from heat recovery projects and GEM. Gross profit increased to a record $4.0 million, mainly due to increased revenues from both heat recovery projects and GEM.

Operating expenses increased by $605 thousand mainly due to one-time costs incurred in the quarter, including a $150 thousand restoration cost recognized for a leased space, a group incentive accrual of $200 thousand, and an investment in website design and digital scoping tool of $90 thousand. In addition, the salary and benefit costs were $110 thousand higher because less salary costs were charged to project costs under cost of goods sold in the second quarter this year compared to prior year.

Adjusted EBITDA increased 202% to $814 thousand and net income increased 2,133% to $618 thousand, compared to $270 thousand and $28 thousand respectively in the second quarter a year earlier.

At the end of November, cash and working capital balances were approximately $2.0 million and $3.4 million, respectively.

Financial Review for the Six Months Ended November 30, 2025

For the six months ended November 30, 2025, revenue decreased by $103 thousand. The decrease was mainly caused by decreased revenues from heat recovery projects, which were partially offset by higher revenues from GEM. Gross profit increased by $799 thousand because of the change in product mix and the improved margin on heat recovery projects.

Operating expenses increased by $398 thousand. The higher amount included a $150 thousand one-time restoration cost accrued for a leased space, an increase in group incentive cost of $140 thousand, $90 thousand invested in website design and data scoping tool, and $120 thousand in general inflationary cost increases. In addition, salary expenses increased because $94 thousand less salary costs were charged to project costs under cost of goods sold compared to prior year. Salary charged to projects is based on chargeable hours. The increase in operating expenses was offset by the increase in foreign exchange gains of $209 thousand compared to the first six months of last year.

Business Outlook and Order Summary

Orders received (“Order Intake”) during the second quarter totalled $5.9 million, bringing the year-to-date total to $17.8 million. The Company ended the quarter with an order backlog of $15.0 million, up 16% from the $12.9 million at the end of the same quarter in the prior year.

The Company also received $6.5 million in new orders subsequent to quarter end, bringing the current order backlog to $21.5 million as of January 26, 2026. A list and description of recent order highlights is available on page 16 to 18 of the Management’s Discussion and Analysis filed today.

Full financial results including Management’s Discussion and Analysis and accompanying notes to the financial results are available on www.sedarplus.ca and investors-thermalenergy.com/en/financial-overview.

Notice of Earnings Call and Webcast

Management of Thermal Energy will host an earnings call and webcast today, January 27, at 8:30 am ET. A question-and-answer session will follow management’s prepared remarks, at which time qualified equity analysts will be able to submit questions via the webcast.

The live webcast will be available at https://tinyurl.com/TMG2026Q2. You may join the webcast via MS Teams on your computer, mobile app or room device. Please join the webcast approximately 15 minutes prior to the earnings call to ensure adequate time for registration and admittance to the webcast.

For more information, including dial-in information (audio only), refer to the Company’s press release from January 21, 2026.

Readers are encouraged to subscribe to TEI News to receive strategic news and updates directly to their inbox.

ENDS

 

Notes to editors

About Thermal Energy International Inc.

Thermal Energy International Inc. provides energy efficiency and emissions reduction solutions to Fortune 500 and other large multinational companies. We save our customers money by reducing their fuel use and cutting their carbon emissions. Thermal Energy’s proprietary and proven solutions can recover up to 80% of energy lost in typical boiler plant and steam system operations while delivering a high return on investment with a short, compelling payback.

Thermal Energy is a fully accredited professional engineering firm with engineering offices in Ottawa, Canada, Pittsburgh, USA, as well as Bristol, UK, with sales offices in Canada, UK, USA, Germany, Poland, France, and Italy. By providing a unique mix of proprietary products together with process, energy, and environmental engineering expertise, Thermal Energy can deliver unique, site-specific turnkey and custom engineered solutions with significant financial and environmental benefits for our customers.

Thermal Energy’s common shares are traded on the TSX Venture Exchange (TSX-V) under the symbol TMG and on the OTCQB under the symbol TMGEF. For more information, visit our investor website at https://investors-thermalenergy.com or company website at www.thermalenergy.com and follow us on Twitter at https://twitter.com/GoThermalEnergy.

Forward-Looking Statements

This press release contains forward-looking statements relating to, and amongst other things, based on management’s expectations, estimates and projections, the anticipated effectiveness of the Company’s products and services, the timing of revenues to be received by the Company, the expectation that orders in backlog will become revenue, the anticipated benefits of the Company’s current efforts at training and business improvement efforts, opportunities for growth, the Company’s belief that it can capitalize on opportunities, the size of markets and opportunities open to the Company and the impact of investments that the Company has made on the Company’s ability to scale. Information as to the amount of heat recovered, energy savings and payback period associated with Thermal Energy International’s products are based on the Company’s own testing and average customer results to date. Statements relating to the expected installation and revenue recognition for projects, statements about the anticipated effectiveness and lifespan of the Company’s products, statements about the expected environmental effects and cost savings associated with the Company’s products and statements about the Company’s ability to cross-sell its products and sell to more sites are forward-looking statements. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions. Many factors, some of which are outside of the Company’s control, could cause events and results to differ materially from those stated. Fulfilment of orders, installation of product and activation of product could all be delayed for a number of reasons, some of which are outside of the Company’s control, which would result in anticipated revenues from such projects being delayed or in the most serious cases eliminated. Actions taken by the Company’s customers and factors inherent in the customer’s facilities but not anticipated by the Company can have a negative impact on the expected effectiveness and lifespan of the Company’s products and on the expected environmental effects and cost savings expected from the Company’s products. Any customer’s willingness to purchase additional products from the Company and whether orders in the Company’s backlog as described above will turn into revenue is dependent on many factors, some of which are outside of the Company’s control, including but not limited to the customer’s perceived needs and the continuing financial viability of the customer. Volatility with respect to tariffs and trade regulation may continue and may impact the Company in ways not currently anticipated. The Company disclaims any obligation to publicly update or revise any such statements except as required by law. Readers are referred to the risk factors associated with the Company’s business as described in the Company’s most recent Management’s Discussion and Analysis available at www.sedarplus.ca.

Non-IFRS Financial Measures

The Company believes the following non-IFRS financial measures provide useful information to both management and investors to better understand the financial performance and financial position of the Company.

EBITDA and Adjusted EBITDA

Management believes that EBITDA (earnings before interest, taxation, depreciation and amortization) and Adjusted EBITDA (EBITDA plus share-based compensation expense) are useful performance measures. The Adjusted EBITDA approximates cash generated from operations, before tax, capital expenditures and changes in working capital. Adjusted EBITDA also assists comparison among companies as it eliminates the differences in earnings due to how a company is financed. EBITDA and Adjusted EBITDA do not have a standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures presented by other companies. There is no direct comparable IFRS measure for EBITDA or Adjusted EBITDA.

A reconciliation of net income to EBITDA and Adjusted EBITDA is shown below.

		Three months ended						Six months ended
		Nov 30, 2025 $			Nov 30, 2024 $			Nov 30, 2025 $			Nov 30, 2024 $
Total net income attributable to owners of the parent		578,393			12,978			725,139			291,268
Total net income attributable to non-controlling interest		39,529			14,694			58,505			45,876
Interest charge		29,727			78,151			60,957			165,446
Interest revenue		(4,836	)		(12,739	)		(10,757	)		(43,938	)
Income tax expense		37,832			16,669			57,137			35,011
Depreciation and amortization		72,148			94,687			150,352			198,112
EBITDA		752,793			204,440			1,041,333			691,775
Share based compensation		61,638			65,306			123,276			130,612
Adjusted EBITDA		814,431			269,746			1,164,609			822,387

 

Order Backlog

Order backlog is a useful performance measure that Management uses as an indicator of the short-term future revenue of our Company resulting from already recognized orders. The Company includes in “order backlog” any purchase orders that have been received by the Company but have not yet been reflected as revenue in the Company’s published financial statements. It is important to note that once an order or partial order is recorded as revenue, the order backlog is reduced by the amount of the newly reported revenue. Order backlog does not have a standardized meaning prescribed by International Financial Reporting Standards and therefore may not be comparable to similar measures presented by other companies.

For additional details on non-IFRS financial measures, please refer to the Company’s most recent Management’s Discussion and Analysis available at www.sedarplus.ca for more details about these non-IFRS financial measures.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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ⁱ Adjusted EBITDA represents earnings before interest, taxation, depreciation, amortization, and share-based compensation expense. See note below about non-IFRS measures.
ⁱⁱ Order backlog represents any purchase orders that have been received by the Company but have not yet been reflected as revenue in the Company’s published financial statements. See note below about non-IFRS measures.
ⁱⁱⁱ Adjusted EBITDA represents earnings before interest, taxation, depreciation, amortization, and share-based compensation expense. See note below about non-IFRS measures.
^iv Order backlog represents any purchase orders that have been received by the Company but have not yet been reflected as revenue in the Company’s published financial statements.

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/281752